HomeMy WebLinkAboutEconomic Impact Study•
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ONYX 2
MAJOR USE SPECIAL PERMIT
ECONOMIC IMPACT STUDY
Prepared for:
02, LLC
Prepared by:
Sharpton, Brunson & Company
June 7, 2004
ONYX 2
EEc no. is Impact Analysis.
Submitted to:
City of Miami
Prepared For:
BERMELLO AJAM►L & PARTNERS
Prepared by:
SHARPTON, BRUNSON & COMPANY, P.A.
One Southeast Third Avenue
Suite 2100
Miami, Florida 33131
(305) 374-1574
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ONYX 2
TABLE OF CONTENTS
THE PROJECT OVERVIEW
EXECUTIVE SUMMARY
Introduction
Summary of Benefits
PAGE(S)
3
4
OBJECTIVES AND DEFINITIONS
Objectives 6
Definition of Economic and Tax Impact 6
Direct and Indirect Effects 6
Measures of Economic Impact 7
Description of Results 8
DISCUSSION OF THE RESULTS BY ECONOMIC INDICATORS
Impact Indicators 9
Results of Indicators 9
Impact of Construction 9
Impact of Ongoing Operations 10
Impact on Local Tax Revenues 10
Analysis by Economic Indicators 10
Employment 10
Wages 11
Output 11
Local Taxes 12
Public Sector Cost 13
Impact Fees 13
EXHIBITS
Exhibit 1: Summary of Economic Impact
Exhibit II: Impact and Other Fees
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Project Overview
ONYX 2 is located at NE 28th Street
and Biscayne Bay in the city of
Miami, Florida (the Project). The
Project consists of 117 condominium
units and 163 parking spaces. The
gross lot area is 89,180 square feet
(2.05 acres) and the net lot area
contains 51,060 square feet (1.17
acres).
ONYX 2, a landmark, luxurious
residential, 49 story high-rise
waterfront development project with
direct vistas to Biscayne Bay is
unique in its design for its sleek
design and the incorporation of a
passive park within one of its parcels
for the use not only of the residents
but of the general public. This effort
starts to address the need for urban
open spaces in fast changing
Edgewater Area in the City of Miami.
The signature residential tower is
geared to attract the empty -nesters,
young professionals, second home
buyers, retirees and newly relocated
families from Latin America. The
Project is located at the end of NE
28th Terrace facing North Bayshore
Drive and Biscayne Bay. Access to
the property is from NE 28th Terrace
which also divides the parcels where
the residential tower is located, from
the parcel developed as the passive
park. Views of the bay are preserved
for the neighborhood by developing
the parcels to the north of NE 28th
Terrace and providing an open space
and passive recreational area on the
parcel south of NE 28th Terrace, The
property is just north of Downtown
Miami in the Performing Arts District.
The Project is situated in an area that
is currently undergoing a significant
urban renewal process, north of the
Performing Arts Center and in close
proximity to Margaret Pace Park,
Bicentennial Park, American Airlines
Arena as well as many other mixed -
use and upscale residential
developments.
The development of the Performing
Arts Center promises to make Miami
Dade County the leader in performing
arts around the world as it will provide
opportunity to being world -class art
and culture as well as showcase
other local South Florida art
organizations. This Arts Center as
well as the other amenities in the
area start to change and establish an
urban living style in the central areas
of the City of Miami and as such will
have a dramatic impact on the
economic vitality of the District and
the compatible developments that will
follow.
Geographically, ONYX 2 is located
just minutes away from Biscayne
Boulevard, 1-95 and SR 836 offering
convenient access to the County's
major expressways. Miami
International Airport is only a fifteen
minute drive from the property and
other major employment centers in
the Downtown area. This exceptional
location will allow residents to quickly
commute to and from employment in
the Dade and Broward county region.
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Project Overview
The building includes liner units
buffering the garage, some of which
will be accessible directly from NE
28th Terrace, one bedroom loft units
and two and three bedrooms units
with view of the bay and the City.
Offering unique style and quality,
each unit will be delivered as finished
residences and designed with a sleek
and elegant amenity package.
Specific finishes include: kitchens
with granite countertops, European
cabinetry and stainless steel
appliances; bathrooms complete with
marble flooring, marble countertops,
free-standing glass showers and
double sinks and bidets (depending
on the unit size); and floors may
range from hardwood floors to marble
tile or laminated concrete.
All the units will have over -sized
windows and sliding glass doors that
lead out to large balconies with glass
railings. The generous use of glazing
will draw in the sunlight and feature
the views of Biscayne Bay during the
day and Downtown Miami at night.
The building's amenities will include
24-hour manned security, with
electronic access into the parking
garage with access from NE 28th
Terrace and a single point of entry
into the residential tower from the
main entrance which will include valet
service. The recreational deck on the
8th floor will include an infinity -edge,
heated swimming pool with a jacuzzi
nestled on the lush landscaping, a
state-of-the-art indoor and outdoor
fitness facility with TVs on the cardio
machines, steam room and sauna.
The floor plates for the building
consist of the following: The ground
level includes a water entrance
feature, entry lobby and reception,
mailroom and building offices the
building's service and loading areas
and parking. The second through
seventh floors will contain parking,
loft units and nee -bedroom units with
lofts. The eighth floor features an
indoor and an outdoor fitness center
with spa facilities, a beautiful garden
deck with an urban style backyard
that has colorful planters and tropical
landscaping, a pool and a jacuzzi.
The ninth floor includes a game and
arcade room as well as a mezzanine.
From the tenth to the 26th floor the
tower includes lofts, one bedroom
and lofts, two and three bedroom
units. Two full floor penthouses are
located at the 47th and 48th floor.
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Intro c uct on
This document represents an in-depth
economic and tax benefits analysis of
the developmental and operation of a
first class condominium building and
retail facilities.
The Project currently contemplated is
comprised of the following
components:
❑ 117 units of high -quality
residential.
❑ 163 parking spaces.
This analysis encompasses the
entire Project and estimates the
economic and tax benefits for
both its developmental and
operational phases.
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Su ary of Benefits
The Project will bring significant
economic benefits to the city of
Miami (the City). This section
summarizes the impact of the
project on employment, public sector
revenues and other economic
benefits as a result of the
development.
Employment
Employment considerations include
the direct employment resulting from
the Project. Average developmental
construction phase employment will
be for approximately 103 employees
and the Project management is
expected to employ 10 people for
on -going maintenance and
operations of the facilities.
Wages
To compute the wages associated
with the new employment we started
with budgeted data directly related to
the developmental and operational
phases of the Project, and we
incorporated data from our research
on retail sales. Total direct and
indirect impacts expected from
wages associated with the new
development approximate the
following:
One Time $19,975,896
Annual $ 563,760
Tax Revenue
The estimate of the public sector
revenues associated with the
development includes taxes and
other revenues generated directly
by the Project. Although public
sector costs are important
elements in measuring fiscal
impact, these benefits have not
been quantified in this document.
This analysis only measures the
benefits derived from the
development. Annual tax revenue
expected to be created totals
$1,636,839.
Output
The estimate of total economic
impact is measured by total
output. This analysis measures
the economic impact of
developmental costs and ongoing,
operational expenditures. To
determine the effect of respending
within the City, we utilized a
multiplier to compute total direct
and indirect benefits. Total output
expected to be generated, as a
result of the developmental and
operational phases of the Project
will approximate the following:
One Time $ 99,932,765
Annual $ 1,428,192
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Summary of Benefits
Significant Community Benefits:
Jobs
Wages
• Taxes
• Economic Activity
Residents' Spending Impacting Local
Businesses:
D Food
➢ Recreation/Entertainment
D Transportation
➢ Retail
The following table and charts summarize the economic impact of the
ONYX 2 development.
CONSTRUCTION
PERIOD ANNUAL
IMPACT RECURRING
Economic Activity Stimulated
Output $ 99,932,765 $ 1,428,192
Wages 19,975,896 563,760
Taxes 1,636,839
$ 3,628,791
Jobs Created
$ 119,908,661
103
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Objectives And Definitions
Objectives
The objective of this analysis is to provide
information on the various benefits
created by the Project and to prepare an
estimate of such benefits to the City.
Our analysis is based on an economic
model, which estimates economic and tax
impacts of various projects on a
designated area. The model is
specifically tailored to the City of Miami
(the City).
Definition of Economic and Tax Impact
The construction and subsequent
operation of the Project will create
important benefits within the City. These
benefits include new income, new jobs,
new tax revenue and new economic
activity impacting upon every sector of
the local economy. Moreover, through
the multiplier effect of respending and
reinvesting, indirect economic benefits
are added to the direct benefits brought
about by initial construction expenditures,
the expenditures from ongoing operations
and new spending at the retail
enterprises.
Direct and Indirect Effects
The total economic impact of public and
private projects and policies on a region
does not end with the impact from the
initial construction expenditures; the
continued benefits to the local economy
must also be considered. Income to firms
furnishing construction materials and
services is subsequently converted into
employee salaries, material purchases,
investment in plant and equipment,
savings, profits, purchases of services,
and a variety of other economic activities.
Income to laborers is subsequently
respent for purchasing of food,
housing, transportation, education,
entertainment, medical and dental
services, clothing, personal services,
and a wide variety of other goods
and services_
Furthermore, income to the
governmental unit is respent as
salaries, purchases, and support of
a variety of programs, including
education, transportation, and social
services. In turn, individuals, firms,
and governments furnishing these
goods and services again spend
their income for more purchases,
salaries, investments, and savings.
In this manner, indirect benefits
result each time the initial sum is
respent, and the additional sum
available in the local economy
induces further job creation,
business development and savings.
Quantification of these indirect
benefits has been the object of
considerable economic study.
Because economic relationships are
so complex in our modern society,
no single area or political unit is a
completely self-contained economic
unit. Therefore, purchases from
other areas and political units are
necessary, and goods services are
exported in return.
As purchases are made from other
units, some of the benefits of
economic respending are lost to the
local economy. Ultimately, a smaller
and smaller portion of the initial sum
would remain, until, after several
rounds of respending, an
insignificant sum is left.
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objectives And Definitions
The indirect effects can be viewed as
a set of "ripples" in the economy.
Indirect, like direct, resources require
labor, materials, equipment and
services for their production to induce
further job creation and spending of
wages.
The "ripple" of the indirect effect
multiplies the original impact of the
purchase. The common measure of
the magnitude of the "ripple" effect is
called a multiplier. A multiplier
measures the total magnitude of the
impact on each particular economic
indicator as a multiple of the initial,
direct effect. For instance, a
multiplier of "1" would signify no
"ripple" effects as the total impact is 1
times the initial impact, while a
multiplier of "2" would imply that the
total impact is 2 times the direct
effect.
The actual magnitude of a multiplier
depends on the likelihood the goods
and services purchased in a region
would be produced in, or provided
from the region.
The model we used to estimate the
total economic impact incorporates a
multiplier developed by utilizing past
consumption and production patterns
in the City.
There will be significant economic
benefit derived from the expenditures
of the residents of the Project on
eating, drinking, grocery, recreation,
retail etc. This report does not include
the economic impact of such
expenditures.
Measures of Economic Impact
Various measures can be used to
indicate the impact of a policy or
project on a region. Specifically,
for this study, they are the
increases in local employment,
wages, tax revenue and output that
result. Definitions of these
measures are as follows:
Employment is measured full-time
equivalent jobs.
Wages include wages, salaries,
and proprietor's income only. They
may include non -wage
compensation, such as pensions,
insurance, and other fringe
benefits. Wages are assumed to
be expended by households in the
area at which the wage-earner
works.
Local taxes include additional
revenues from both ad valorem and
non ad valorem assessments.
Direct expenditures include those
sums expended for land
acquisition, site preparation and all
hard and soft costs associated with
a project.
Indirect expenditures are those
sums expended within the local
economy as a result of the "ripple"
effect described earlier.
Output describes total economic
activity, and is essentially
equivalent to the sum of direct and
indirect expenditures (exclusive of
wages and taxes).
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Objectives ves And Definitions
Description of Results
For the purpose of describing the
total economic benefits of the
Project, the related expenditures
and economic activity stimulated
have been broken into two
categories:
Developmental
Annual Recurring
Developmental expenditures
include those expenditures related
to the design and construction
phase of the Project and related
amenities.
Annual recurring activities
stimulated are those expenditures
incurred in connection with the
ongoing operation of the Project.
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Discussion Of The Results By Economic
Indicators
Impact Indicators
We measured the Project's impact on
four commonly used indicators of
economic activity.
Those indicators are:
• Jobs
• Wages
• Total output
y Local taxes
Results of Indicators
Exhibit l details the Project's direct and
indirect impact on the above economic
indicators for Miami. A summary of
such impact follows:
DEVELOPMENT
fOne Time) OUTPUT
Direct
Indirect
$ 53,178, 355
46,754,410
$ 99.932.765
ANNUAL
Operational:
Direct $ 760,000
Indirect 668,192
$ 1.428.192
The economic indicator most commonly
measured, and publicly reported on to
gauge the economic impact of a public
project is output. The impact of a
project on the indicator output is often
referred to as the project's economic
impact.
Impact of Construction
The site preparation and construction
expenditures, including soft costs and
impact fees are estimated at $145
million. Such activity will create
approximately 103 new full time
equivalent jobs and employ a maximum
of 163 workers during peak periods.
The workers will earn approximately
$10.6 million in direct wages.
WAGES TAXES EMPLOYMENT
$ 10,630,000
9,345,896
103
$ 19.975.896 103
$ 300,000 $1,636,839 10
2R3,760
$ 563,760 $1,636,839 10
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Discussion Of The Results By Economic
Indicators
Impact of Ongoing Operations
As a result of the on -going operation and
maintenance of the Project, Miami will
gain approximately 10 new, permanent,
full-time equivalent jobs. The wages of the
workers who obtain these positions will
provide an impact of approximately $564
thousand annually.
The total expenditures for the Project's
operations, will provide a new, permanent
impact of $1.4 million annually to the
City's economy. This impact consists of
the effects of the direct expenditures from
the maintenance, security and day-to-day
operation of the Project, and the multiplied
effects of such spending thus creating
indirect benefits.
Impact on Local Tax Revenues
As a result of the construction and
operation of the Project, various state, city
and city governments and agencies would
gain an estimated annual tax benefit of
$1.6 million.
Analysis by Economic Indicators
Our analysis of the economic and tax
benefits of the Project was done by each
major phase of the Project. We identified
the major phases to be developmental
and operational.
This analysis determines the economic
benefits to the City by identifying such
benefits for each of the phases.
The effects on economic indicators
used to measure benefits
(employment, wages, output and
taxes) were computed for each
phase.
Em ployment
Employment is one of the most
important economic benefits of the
Project. It is one of the most
accessible and direct benefits for the
City's residents and it's residents and
is a primary means by which
developmental, operational and
maintenance expenditures generate
indirect economic benefits. A portion
of this employment occurs on -site as
a result of new spending at the retail
enterprises, and a portion is derived
from on -going operations of the
Project. Further employment is
generated off -site by the expenditures
of employees of the Project and
businesses located in the Project, at
area businesses.
As can be seen in Exhibit I, total
short-term (developmental)
employment will average 103
employees over an seventy-two
month period and a total on -going
employment will average 10.
The total on -going positions can be
summarized as follows:
• Management
• Security
• Parking
Maintenance/Facilities
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Discussion Of The Resu
Indicators
ks By Economic
Wages
The analysis deemed wages are a direct
by-product of employment. As discussed
in the above section, both on -site and off -
site jobs are created. There were both
temporary and permanent in nature.
To compute the wages associated with
the new employment we started with
budgeted data directly related to the
developmental and operational phases of
the Project.
Employment, such as construction related
employment, was obtained directly from
construction estimates. These numbers
were tested for reasonableness.
Output
The output generated, as a result of the
development and operations of the
Project, is caused by the following type of
expenditures:
• Development costs expended in the
City (100%)
• Annual operational expenditures of
management company
• New spending in the locality by
employees of businesses
located in the Project
To incorporate the impact of dollars
being respent and/or reinvested in the
City, a multiplier was applied to total
direct output. A multiplier of 1.8792
was used to determine total direct
and indirect output created by the
Project. This multiplier indicates that
for every $100 spent in Miami,
another $187.92 will be respent or
reinvested in Miami. This multiplier
was obtained from the Dade City
Planning Department.
Direct output from the developmental
phase of the Project is primarily a
result of developer costs. These
costs include land acquisition, site
preparation and soft and hard costs
relating to the Project's construction.
To determine the total output we
determined what development costs
were expected to be or had been
spent in Miami.
Total direct output during the
development phase is $53 million.
Total indirect output created by the
direct respending in Miami is $47
million. Thus total Miami Output from
the development of the Project is
$100 million.
The final component of output results
from the direct operating expenditures
of the Project, and the indirect
benefits created as a result of the
multiplier effect on direct output.
The Developer provided us with an
annual operating budget for the
Project. An overall assumption was
made that all expenditures would be
spent initially in the City.
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Discussion Of The Results By Economic
Indicators
Output (Contd.)
The total operating expenditures
incorporate all estimated expenses of
the ongoing operation of the Project.
The impact of the retail enterprises
was measured separately as an
economic indicator.
To incorporate the potential
respending and reinvesting in Miami,
the multiplier effect was measured.
By applying a multiplier of 1.8792 to
the total direct output from operating
expenditures and the retail
enterprises, we determined total
output (direct and indirect) from on-
going operating expenditures and
retail sales.
Local Taxes
A key and significant benefit
generated from the development and
operation of the Project is taxes.
Several types of tax revenue will be
generated from this project including
ad valorem taxes. Specific ad
valorem taxes include real and
personal property taxes. Other taxes
include occupational taxes and
community development taxes.
New real property taxes will be
assessed on the Project. The
assessment is based on a
predetermined mileage rate being
applied to the taxable value of the
real property. We computed real
property taxes for the developmental
phase based on the cost of the
development of the Project.
This assessment base is very
conservative since tax on real
property typically is assessed on
appraised values and not actual
cost.
The basis for ongoing taxes is also
overall cost. The mileage rate was
obtained from the City Tax
Collectors office relative to the
Project's location. The projected
annual real property taxes are
approximately $106 million.
Total ad valorem taxes assessed
by Miami -Dade County are
allocated based on mileage rates to
certain governmental entities.
Listed below is the allocation of
projected tax revenue.
City Operating
School Operating
County Operating
Debt Service - City
Debt Service -County
South Florida Water
Library Operating
School Debt Service
Florida Inland Navigation
Environmental Projects
Children's Trust
TOTAL
$ 532,833
511,885
362,965
65,673
17,330
36,303
29,553
41,471
2,341
6,081
30,404
$ 1,636,839
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Discussion Of The Results By Economic
Indicators
Local Taxes (Contd.)
Although not quantified, the City, through its
receipt of allocated state sales taxes will
receive an additional benefit as a result of the
development and operation of the Project,
and from the retail enterprises.
Public Sector Costs
Impact fees
Very significant factors in measuring the
economic impact on a specific region of a
project are impact and other required
development fees. A summary of these fees
are listed below:
• City of Miami Developmental Impact Fee
• City of Miami Developmental Admin Fee
• Miami -Dade County Roadway Impact Fee
• Miami -Dade County School Impact Fee
• Building Permit Fee
• Installation Energy Fee
• Other Fees
For the purpose of this economic impact
analysis, fees are included as a part of the
direct development cost (output). Impact fees
total approximately $474 thousand and other
fees total approximately $320 thousand.
These fees are shown in detail in Exhibit 11.
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Exhibit List
Exhibit I
Exhibit 11
Summary of Economic Impact
Impact and Other Fees
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Exhibit
OUTPUT WAGES EMPLOYMENT TAXES
DIRECT
DEVELOPMENTAL $ 53,178,355 $ 10,630,000 103
OPERATIONAL 760,000 300,000 10 $ 1,636,839
TOTAL DIRECT 53,938,355 10,930,000 113 1,636,839
INDIRECT
DEVELOPMENTAL 46,754,410 9,345,896
OPERATIONAL 668,192 263,760
TOTAL INDIRECT 47,422,602 9,609,656
TOTAL BENEFITS $ 101,360,957 $ 20,539,656 113 $ 1,636,839
TOTAL DEVELOPMENTAL $ 99,932,765 $ 19,975,896 103
TOTAL OPERATIONAL 1,428,192 563,760 10 $ 1,636,839
TOTAL BENEFITS $ 101,360,957 $ 20,539,656 113 $ 1,636,839
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Exhibit - II
IMPACT AND OTHER FEES:
A. Development Square Footages:
1) Total gross building area (with parking)
2) Maximum development area (FAR)
3) Gross parking area
Square Footage
479,160
228,820
89,740
B. Impact Fees: Amount
1) City of Miami Developmental Impact Fee
2) Developmental Impact Administration Fee
3) Miami -Dade County Roadway Impact Fee
4) Miami -Dade County School impact Fee
Total of all Impact Fees
C. Non -Impact Fees:
1) Miami Dade W.A.S.A. "connection fees"
2) Building Permit Fee
3) Installation Energy Fee
4) Major Use Special Permit Application Fee
5) Miami -Dade County Code Compliance
6) Radon Gas Fee
7) Fire Plan Review Fee
8) Ground Cover Fee
9) Land Use/Zoning
10) Zoning Review for Building Permit Fee
11) Certificate of Occupancy Fee
12) Application Fee
127,539
3,826
102,609
239,759
$ 473,733
$ 163,566
54,583
47,916
30,000
15,500
2,396
4,552
253
511
60
250
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Total of all Non -Impact Fees $ 319,622
Total of all Fees for Project $ 793,355
Source: City of Miami Planning, Building and Zoning Department.
Miami Dade County Impact Fees
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